Something funny happened when my late mother-in-law came to live with us six years ago. No, it wasn’t that I decided to move to a tent–she was lovely. But she really needed her own place. Renting anything that was nice, close to us, and accessible to public transportation was beyond her budget. Then my wife and I lucked out and found a beautiful co-op, studio apartment with majestic views of Manhattan and two swimming pools for only $62,500.

That isn’t a typo. The monthly fees, which included everything from utilities to cable to a parking spot for us, were just $1,000. Co-op rules made it impossible for someone of her limited means to buy it, even if we gave her the money, so we did and she just paid the fees.

As an owner (technically a shareholder), I got the financial statements and board meeting notes of the co-op, which consisted of five large buildings. (Here’s an explainer for those of you unfamiliar with this type of apartment, which is most common in the Northeast). The balance sheet was a mess due to its unionized workers’ reliance on a multi-employer pension plan that was underfunded. As more employers default, the surviving ones pick up the liabilities.

I was aware of that going in. But the most surprising thing was how some of the other residents saw things. For example, there was a big debate about what to do with a gorgeous penthouse apartment the co-op had taken into possession when the owners died and their estate defaulted. It had a spacious balcony big enough for a party with an unobstructed view of the Manhattan skyline and Hudson River. If it had been a condo it would have been worth millions. Yet the co-op board had it on sale for $38,000, barely half what we paid for my mother-in-law’s far smaller place, and was finding no takers. The problem is that the fees were proportional to floor space and they had climbed to more than $7,000 a month–about what the most expensive rental in town would cost.

The board minutes indicated that residents were shocked it was so cheap and were wary of selling even at that price because it would depress the value of their own apartments. But the foregone fees were costing them all money every month they hesitated, and that the low price wasn’t the actual problem–it was what it foreshadowed. The liabilities they had all signed up for could eventually erase the resale value of their smaller apartments too.

The penthouse was, financially-speaking, far inferior to a rental of similar quality, which is why nobody was interested. If you can’t afford a fancy place any longer, you just move out at the end of the lease. A landlord doesn’t chase you down asking for that amount in perpetuity until you can find someone else to live there. And if there are some emergency expenses like fixing a roof, he or she can’t just tack on the cost to your rent.

We sold our apartment at a small profit after my mother-in-law’s passing, but I thought about the upside-down economics of that complex as I was researching my latest column for The Wall Street Journal. If you own any type of property, and certainly if you’ve ever considered buying a timeshare, keep reading.

It was provocatively titled “How To Buy a Week in Paradise for $1.” The average sale price for a timeshare unit bought from a developer is about $24,000, typically for a one-week per-year deed. There are 1,541 resorts in the U.S. alone with more than 200,000 units divided into 51 weeks (one is for maintenance). If just three-quarters are owned by individuals who attended one of those 90 minute sales pitches and owners’ mental accounting puts existing units’ value at just $15,000 apiece then the combined (imaginary) value of those weeks is well over $100 billion. These days some people buy units in a land trust giving them points to use, but the same principle applies, and the points are even more profitable for developers (I explain why here).

Timeshares bought on the secondary market might be worth it for larger families who enjoy going to the same place every year or people with the patience to navigate complex exchange schemes, but what are they really worth? Even some beautiful properties can be had for a dollar. There’s a reason the developer doesn’t just take them back for free.

The management of an absolutely stunning Four Seasons resort in southern California that let me use a photo angrily asked the paper to take it down when I pointed out in the caption that several units could be had there for practically nothing. At least one actually cost less-than-nothing as the desperate seller was willing to pay $1,000 in property closing fees too. You can check out any time you like, but you can never leave.

(Here’s a pic of the print issue where the photo appeared).

Just a casual search on sites like RedWeek or Timeshare Users Group turns up hundreds of listings for a buck, or even zero, and that understates the problem because many properties would only be worth buying if you were paid way more than the closing costs. Sellers can’t afford that, and those sites don’t accept negative numbers anyway. Owners who just walk away are hounded by collection agencies. Two people I spoke with, a retired New York sanitation worker and an ex-Marine sniper who was wounded in Iraq, are still trying to sell properties they thought were bargains.

It is possible to force a resort to take a property back by hiring a reputable lawyer. But someone has to pay those delinquent fees to keep the lights on. Distress compounds the burden on those who can afford, and choose, to keep paying.

The high-end of the timeshare market–the most desirable weeks at nice resorts, such as President’s Day week in Florida or Vail managed by a large, deep-pocketed company–is still worth something. Maybe a week was purchased for $30,000 and could sell for $4,000, which is a specific example cited to me in the article by broker Don Nadeau. As one person told me, buyers should think of resorts more like engagement rings than property–their value is immediately less than what you pay a developer, but you can still enjoy it and have a sentimental attachment.

So I hope that you don’t own a timeshare that you regret, but I encourage those of you with larger families to consider renting weeks from owners at a secure site–I’ve used verified transactions on RedWeek. They can be a good deal for people on both sides of the transaction.

How does this apply to homeowners? Well, taken to an extreme, the math eventually works the same way. 

A pretty typical house near mine is for sale for $749,000. The owner had tried to rent it for $3,800 a month in 2021, according to Zillow. I would expect it to sell because a shortage of properties is keeping prices high in New York City suburbs for now, but the underlying costs have gone up a lot. Someone making a 20% down payment would still be out-of-pocket $60,000 a year for their mortgage, insurance, and property tax. The latter two of those can keep going up as inflation and the wages and health care costs for local, unionized teachers and police march higher. We just got our assessment for 2024 yesterday and I’m trying not to think about it.

Clearly you would struggle to make money as a landlord buying it at today’s mortgage rates and prevailing rents–you’d be out of pocket by about $10,000 a year even before maintenance. But what about just biting the bullet and owning it? It’s an investment, right?

When my wife and I bought our house 20 years ago, the combined tax and insurance was 1.5% of the price we paid. Today it is nearly double that–not a deal killer, but not good. Extrapolating that trend, if we decided to become snowbirds in 20 years, that would have grown to 6% of the home price every year. Of course that assumes all of our neighbors are able to keep paying those taxes. What if many can’t, or if there is a political uproar resulting in people below a certain income or wealth level receiving a break at the expense of those able to keep paying? What if that starts to hit the appreciation of homes in our town and state? The $38,000 co-op cost more than $80,000 a year.

Of course the dirty secret of the timeshare business is that they were never “worth” $30,000. The price reflected the costs of a slick sales job and all the goodies they had to give away. Marriott buys back old timeshares for $80 million to $90 million a year that it resells for $1 billion or so, according to my conversation with its CEO, John Geller. That means you can pay slightly more than Marriott would pay–maybe 15 or 20 percent of the price at a presentation–and get a timeshare that way too. Yet even some bargain hunters are now surprised at the difficulty of finding a buyer.

Homes don’t have a secret secondary market and the math won’t get so extreme. But it can grow to enough of a burden that people who counted on retiring on their home equity might find that there isn’t nearly as much left as they expected there to be. The older couple who sold us our house in 2003 were very interested in maximizing the sale price because it was pretty much all they had saved, and that was pretty typical.

The moral of the story? Other than steering clear of timeshare promotions (unless you are 100% confident you won’t buy) is to consider the future liabilities of things that sound like investments.